Texas Governor and Republican presidential candidate, Rick Perry, released his tax reform proposal yesterday centered on a 20% flat income tax. Putting a spotlight on the flat tax reminded me of a forum I once moderated on the subject featuring none other then our once and future governor, Jerry Brown.
It was 1995. The flat income tax had been embraced by Brown in his 1992 run for the White House and would be highlighted again in Steve Forbes presidential bid of 1996.
The Howard Jarvis Taxpayers Foundation hosted the forum at the Ronald Reagan Presidential Library. Besides Brown, two other advocates of the flat tax spoke, Alvin Rabushka of the Hoover Institution who literally wrote the book on the flat tax with co-author Robert Hall, and Bruce Herschensohn, former Republican U.S. Senate candidate who also believed in the flat tax.
Brown argued that the flat tax proposal should be taken seriously. His observations at the time still resonate today. He said, “The times call for something more radical than garden variety politics. The tax laws are so voluminous you can’t understand them, and they keep changing them.”
Brown said the flat tax would make government better. “Simplicity, clarity and efficiency will hopefully lead to honesty (in government),” he said.
Making a bold suggestion that won over many adherents in the audience of about 400, Brown said he would support letting people vote for changes in the flat tax rate through a national referendum.
Perhaps the latter proposal wouldn’t make the cut for someone actually running for president today, but when Brown was a candidate for that office in 1992, he said in support of his flat tax plan: “We have a 4,000-page tax morass that feeds on the corruption of selling loopholes for campaign contributions. None of those pages are for you and me. They’re for people with high-priced lawyers that buy those loopholes.”
Beyond the simple nature of a flat tax, it is hailed as a pro-growth measure.
The tax is not truly flat, however, because there are usually some deductions left in the code, although most are eliminated. Perry now calls for a 20 percent rate while preserving deductions for mortgage interest, charity, and state/local taxes. He also makes the odd proposal of making the flat tax optional thus leaving in place a much criticized tax system.
Jerry Brown proposed a flat tax for all Americans with a 13 percent tax rate. Steve Forbes rate was 17 percent with different sets of deductions allowed.
More to the point, as Brown contemplates the tax structure in California and his desire for more revenue, I wonder if he still believes in the principals of a flat tax and its power to grow the economy, thus creating jobs and tax revenue.